Buy Dr Reddys Labs; target of Rs 3750: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking`s research report on Dr Reddys Labs“For 2QFY2015, Dr Reddy’s Laboratories (DRL) posted net sales of Rs3,587.9cr (V/s an expected Rs3,900cr), a yoy growth of 6.9% yoy. The growth was subdued as the US geography which is the company’s growth driver posted a growth of only 8%. Other key geographies, namely emerging and Indian markets, posted a yoy growth of 14%. The operating margin came in at 22.7% (V/s an expected 25.2%), dipping by 245bp yoy, as the R&D expenditure during the quarter rose by 36.7% yoy. This, along with higher taxation and dip in other income, lead the net profit to come in at Rs574cr (V/s an expected Rs715cr), a yoy dip of 16.8%. Given the stock’s valuation, we maintain our Buy recommendation on the stock with a price target of Rs3,723.” “For the quarter, the company posted net sales of Rs3,587.9cr (V/s an expected Rs3,900cr), a yoy growth of 6.9% yoy. The growth was subdued as the US geography which is the company’s growth driver posted a growth of only 8%. Other key geographies, namely emerging and Indian markets, posted a yoy growth of 14%. On the operating front, the gross margin came in at 63.9% (V/s an expected 64.1%), a yoy expansion of 80bp. In spite of the same, the operating margin came in at 22.7% (V/s an expected 25.2%), dipping by 245bp yoy, as the R&D expenditure during the quarter rose by 36.7% yoy. This, along with higher taxation, which rose by 51.0% during the period (tax as % of PBT was 17.4% V/s 10.3% in 2QFY2014); and a 26.7% dip in other income; lead the net profit to come in at Rs574cr (V/s an expected Rs715cr), ie a yoy dip of 16.8%.” “We expect net sales to grow at a CAGR of 18.2% to Rs18,477cr and adjusted EPS to record a 21.2% CAGR to Rs186.1 over FY2014-16E. We recommend a Buy rating on the stock,” says Angel Broking research report.  

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